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Article Can bitcoin be considered the digital gold?

Vladv26
(@vladv26)
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Gold has an estimated 10 trillion dollar market cap, but what makes it so valuable? After all, it's just a type of rock that can be found under our feet in the ground.

The thing that makes gold so valuable is the fact that its supply is limited. We don't know for sure the exact total supply of gold available on this planet but we know how hard it is to obtain it and we can also estimate what the total supply would be. There is just enough gold to justify using it as a form of payment but there isn't a lot of it available otherwise it would be considered worthless. It all started when someone considered gold to be a valuable thing and started accepting is a form of payment. From there more and more people did the same and until the present moment, people keep doing it. These are the main reasons why gold is worth so much money today.

Since its creation in 2009 bitcoin has undoubtedly outperformed gold as it went from just a couple cents to more than $60k a couple of days ago in March 2021. Many people consider Bitcoin as digital gold since it is a store of value, it can easily be exchanged and it also has the advantage of decentralization along with great security which is more appealing to millennials. At the price of $60k, the total bitcoin market cap was worth around 10% of gold's market cap. Some people consider this as a huge success but it is still fairly low in comparison to gold. 

So, can bitcoin be considered digital gold? It is still very early to make such a statement. Many analysts from the crypto market showed that the bitcoin market cap is not actually as big as everyone thinks and that's because a lot of the total supply of bitcoin has either been lost or was not used for a very long time. This pushes the total market cap estimation of bitcoin to less than 5% in comparison to gold. 

 

Bitcoin is still very young when compared to gold. Gold has been around for hundreds of years, being used as a store of value while bitcoin is only 12 years old. Bitcoin might have adapted faster to this digital age, but it still lacks trust from the investors. Therefore it is still too early to compare bitcoin with gold and replace it. 

 

 

 

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Topic starter Posted : 17/03/2021 5:19 pm
Rayan M liked